Liquidity and Yield farming

Flack Exchange FAQ: Liquidity and Yield Farming

How does manual mode function?

  • Concentrated Liquidity: Allows providers to set custom price ranges for tokens, focusing liquidity where trading is anticipated.

  • Efficient Capital Use: Unlike even distribution across all prices, concentrated liquidity focuses on selected price ranges.

Example of Mechanics:

  • Volatile Pair: Liquidity provided only within a certain price range (e.g., $1.10 - $1.30).

  • Stable Pair: Concentrated around a tight range near the mid-price (e.g., $0.995-$1.005).

Auto vs. Manual Mode:

  • Manual Mode: For experienced providers, offering control over price ranges.

  • Auto Mode (spNFT): Manages price range adjustments, enabling trading fees, farming emissions, and Hyper incentives.

What is Merkl?

  • Incentive Mechanism: Rewards manual liquidity positions with additional incentives atop trading fees.

APR in Concentrated Liquidity:

  • Fee Distribution: Concentrated liquidity may yield higher returns due to less idle capital, even if swap fees remain the same.

Selecting Price Ranges:

  • Market Movement Consideration: Choose ranges based on expected price movements and willingness to manage positions actively.

Additional FAQs

APR Calculation for Trading Fees:

  • Calculation Method: Based on total active TVL and fees, with an average over the past 7 days.

Custom Token Pairs in V3:

  • Creation Possibility: Yes, you can create new token pairs by providing liquidity in unestablished combinations.

Managing V3 Positions:

  • Monitoring & Unbinding: Accessible through the 'Earn->Positions->LPV3' section.

Withdrawal from Concentrated Liquidity:

  • Flexibility: Positions can be withdrawn anytime via the 'Unbind' button in the LP V3 page.

Fee Distribution in Concentrated Pools:

  • Proportional Allocation: Fees from swaps within set price ranges are distributed based on contributed liquidity and duration in the pool.

V2 Pool Continuation:

  • Ongoing Support: No plans to discontinue V2, acknowledging its value amidst the complexity of V3 for some users.

Frontend Exchange Page Limitation:

  • Stable Logic Constraint: Prevents reverse calculations, impacting the top box amount setting.

Advantages of spNFT Over Standard Liquidity:

  • Enhanced Yield: Besides earning trading fees, spNFTs offer yield-bearing capabilities and access to additional features like incentivized farms.

Withdrawing Liquidity:

  • Positions Tab: LP tokens can be managed and withdrawn under the 'Positions' tab.

Last updated